Over 30 years ago Michael Porter identified a holistic approach to understanding

Question

Over 30 years ago Michael Porter identified a holistic approach to understanding how competitive forces shape strategy. He posited that the only way to truly insulate an organization from underlying economic volatility is by understanding the 5 competitive forces and how they relate, fundamentally, to the organization.

The five forces are:

         Rivalry among existing competitors

         The bargaining power of Suppliers

         Threat of New Entrants to the market

         The bargaining power of Buyers

         Threat of Substitute Products/Services

Select ONE of the industries below and identify a specific company in that industry and identify the key drivers of competition for that industry and specifically for the selected company. Explain how those external competitive forces are affecting the industry and company and the effect of those forces on the overall strategic planning processes uniquely for that company and generally for that industry. Offer supporting rationale for your explanation and be sure to reference your statements using proper APA formatting.

Industry

         Airline

         Healthcare

         Retail

         Fast Food

         Hotel

Utilizing the industry/company selected for Learning Activity #1 and your comments regarding the key drivers of competition based on Porter’s 5 Competitive Forces, what do you believe is a limitation to only evaluating those competitive forces for that selected industry/company. In other words, what implications are NOT considered when only utilizing Porter’s 5 Competitive Forces and how might you identify those additional external factors? Offer supporting rationale for your explanation and be sure to reference your statements using proper APA formatting.

Explanation / Answer

Listing and analyzing Porter’s 5 forces for a company is a great strategy to understand a company’s position in a competitive market. For this case, let’s pick up the fast food industry and take a very common example which is known to most of us, McDonalds fast food chain. Now, the end objective of doing Porter’s five force analysis is to understand the intensity of the competitive forces and build strategies to minimize their negative impact. Lets understand all the 5 forces one by one:

In my opinion, Porter’s 5 force analysis is a good tool for analyzing competitor market but many points seem redundant. Also, it is not an in depth analysis for business strategy formation as the core areas of company itself are not discussed. Also, places where they can capitalize on their competitors is not discussed. This analysis has a significance of its own but a much more comprehensive study for creating business strategy would be doing a SWOT analysis.

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